What this guide covers
Public policy is the most frequently invoked — and most unpredictable — ground for refusing enforcement of foreign arbitral awards in UAE courts. Understanding how UAE courts apply this ground, and how it has evolved from broad domestic public policy to a narrower international standard, is essential for counsel structuring cross-border arbitrations with UAE enforcement in mind.
The international vs domestic public policy standard
Academics and arbitration practitioners distinguish two standards for public policy in enforcement proceedings: (i) Domestic public policy: any mandatory rule of the enforcement forum applies — courts refuse enforcement of awards that conflict with any provision of local law that cannot be contracted out of. Under this standard, an award applying a different interest rate structure from UAE Civil Code defaults could be refused. (ii) International public policy: only fundamental principles of the enforcement forum apply — courts refuse enforcement only where the award shocks the conscience of the court or violates basic notions of justice, not merely because it differs from domestic law. This is the standard endorsed by the International Law Association (ILA) and the ICCA NYC Guide.
UAE courts' standard has evolved. Early post-2006 enforcement decisions were inconsistent — some applied domestic public policy broadly. The Federal Supreme Court's 2016–2023 jurisprudence has progressively adopted the narrower international public policy standard, consistent with UAE's commitment to the NYC. The 2022 amendments to UAE commercial procedure law reinforced the pro-enforcement approach. Current practice: UAE courts apply international public policy — the ground is reserved for fundamental violations, not differences in applicable law.
Interest provisions and the usury concern
Historically, the most common public policy objection in UAE enforcement proceedings was to award provisions requiring payment of interest at commercial rates. UAE Civil Code (Federal Law 5/1985) restricts interest and permits courts to reduce excessive interest. Some early UAE courts read this as a public policy bar to enforcing awards with commercial interest rates (5%–8% p.a.) common in English law-governed contracts.
The trend since 2018 has been to enforce commercial interest provisions: UAE courts have recognised that international commercial transactions routinely involve interest provisions consistent with international practice; applying UAE domestic interest restrictions to cross-border commercial awards would undermine UAE's position as an international commercial hub; the Federal Supreme Court has confirmed that commercial interest at market rates does not violate UAE public policy per se. Practical note: compound interest and very high penalty rates (above 12%–15% p.a.) continue to attract scrutiny — draft award interest provisions at market rates rather than punitive levels.
Islamic law (Sharia) and public policy
UAE constitution establishes Islamic Sharia as a principal source of UAE law. Some early UAE court decisions refused enforcement of awards on Sharia-based public policy grounds in matters touching personal status, family property, and certain prohibited financial transactions (riba — interest, gharar — excessive uncertainty). In purely commercial matters between corporate entities, Sharia-based public policy arguments have been progressively narrowed.
The most significant current Sharia-public policy risk is in financing transactions: if an award requires payment under a financial structure that might be characterised as riba (e.g., a purely interest-based lending structure with no underlying asset), an award debtor may invoke Islamic finance public policy. Structure cross-border financial contracts with local legal advice on UAE law compliance to minimise this risk.
Other public policy grounds in UAE practice
Corruption and illegality: UAE courts refuse enforcement of awards requiring performance of an illegal contract — contracts to pay bribes, contracts for prohibited goods, contracts violating UAE sanctions. This is a genuine public policy ground applicable in all jurisdictions. Awards arising from contracts tainted by corruption are vulnerable, not only at the seat but in UAE enforcement. Mandatory regulatory jurisdiction: where the award orders a party to perform an act subject to UAE regulatory approval (e.g., transfer of real estate title, transfer of shares in a UAE company), enforcement may be characterised as conflicting with UAE regulatory public policy. The tribunal should structure awards as orders for payment of damages in lieu of specific performance where specific performance would require UAE regulatory involvement.
Practical checklist
- Interest: draft interest provisions at commercial market rates (e.g., EIBOR + margin, or 5%–8% p.a.) — avoid compound interest or penalty rates above 12%
- Governing law: awards under contracts governed by foreign law are enforceable in UAE — apply foreign law consistently and cite it in the award to resist domestic law application arguments
- Specific performance: avoid awards ordering specific performance of UAE-registered transactions (real estate transfer, UAE company share transfer) — order damages in the alternative
- Financial structures: ensure underlying contracts comply with UAE financial regulations, particularly for financing/lending contracts
- Corruption check: conduct full anti-corruption due diligence on counterparties; corruption tainted contracts face enforcement challenges globally, including UAE
- Advance planning: if UAE enforcement is a realistic scenario, review draft awards before signing off — consider whether any provision could trigger a UAE public policy objection
What we'd typically advise
The best protection against public policy challenges is structuring the underlying contract and the arbitration proceeding to minimise friction with UAE mandatory law. This does not mean structuring around UAE law — it means ensuring the award is commercially orthodox and does not contain provisions that a UAE court could characterise as fundamentally offensive to UAE values. In practice, the vast majority of commercial arbitral awards are enforced without public policy difficulty in UAE courts. The risk is real but manageable with careful drafting.
Frequently asked questions
Can a UAE court refuse enforcement of an award applying foreign law on public policy grounds?
No — the mere fact that an award applies foreign law is not a public policy ground. UAE courts recognise parties' freedom to choose governing law. Enforcement can only be refused if the specific result of the award (not merely the application of foreign law) conflicts with UAE international public policy.
Is an award clause awarding legal costs enforceable in UAE?
Generally yes. UAE courts enforce cost provisions in foreign arbitral awards. UAE courts themselves award legal costs in proceedings. A cost provision in an arbitral award does not violate UAE public policy.
Can a UAE court partially enforce an award while refusing enforcement of a public-policy-offending portion?
Yes. FDL 6/2018 Art 57(3) allows partial enforcement — the court may enforce the portions of the award that do not engage public policy grounds while refusing enforcement of the specific provision that offends. This is particularly useful where only the interest provision or a specific injunction is problematic.
Does the DIFC apply a different public policy standard?
DIFC Courts apply DIFC Arbitration Law (Law No. 1 of 2008 as amended). DIFC public policy is interpreted in the context of DIFC law, which is predominantly English common law with UAE federal law overlay. DIFC Courts have generally applied a narrow international public policy standard consistent with English court practice — narrower than some onshore UAE courts.
Is an award requiring performance of a RERA-registered off-plan contract (specific performance) enforceable in UAE?
There is genuine risk. Off-plan real estate in Dubai is regulated by RERA (Law 13/2008). The Dubai courts have exclusive jurisdiction over certain RERA matters. An award ordering specific performance of a RERA-registered sale and purchase agreement could face a non-arbitrability challenge (RERA exclusive jurisdiction) or a public policy challenge (regulatory public policy). Seek specific UAE real estate law advice before seeking such an award.
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Published 20 May 2026. General information only — not legal advice. Contact us for matter-specific advice.